Market Review 06-11

Market Review 06-11

Forex News

Dollar Treads Water Ahead of U.S. Mid Term Elections


The dollar held in tight ranges versus its major rivals on Tuesday with investors putting discretion before valor as they counted down to the U.S. midterm vote, the first major electoral test of President Donald Trump’s big tax cuts and hostile trade policies.

The U.S. congressional election is widely expected to boost the Democratic Party, which has a strong chance of winning control of the House of Representatives, with Republicans seen likely to keep the Senate.

“We know that dollar bulls like the Republican controlled Congress because it supports Trump’s policies. So if the Republicans maintain control of both parts of the government, the dollar will soar,” said Kathy Lien, New York based managing director of currency strategy at BK Asset Management in a note.

On the other hand, Lien believes that if the Congress is split, with the Democrats controlling the House and Republicans the Senate, the prospect of legislative gridlock would make it difficult for policies such as Trump’s middle class tax cut to pass and would be negative for the dollar in the short term.

The dollar index .DXY, a gauge of its value versus six major peers traded flat at 96.33. It had hit a 16-month high of 97.20 last week.

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When is the RBA Rate Statement/Decision, and How Could it Affect the AUD/USD?


BA Rate Statement overview

Early Tuesday at 03:30 GMT sees another go-around for the Reserve Bank of Australia (RBA) on interest rates and an updated rate statement, though movement on the policy front is far from expected by broader markets as the Aussie central bank continues to keep itself dug in at a firm rate of 1.5%, but today traders will be keeping a close eye on the RBA’s dialogue, with extra focus on the central bank’s inflation and growth expectations looking forward, as well as forecasts for the Aussie job market. Lending and credit conditions are also high up the list for central bank watchers, with an increasing number of policymakers showing concern about tightening lending requirements.

How could it affect the AUD/USD?

The AUD/USD has already been teasing into a bullish stance recently, helped along by sporadic Greenback-selling, and as noted by FXStreet’s own Omkar Godbole, the Aussie sees growing potential for a bullish extension as long as the RBA doesn’t deliver any nasty surprises: “the AUD found acceptance above the long-term falling trendline and the key 50-day EMA hurdle last week, validating the bullish divergence of the RSI and stochastic. Notably, the bullish breakout is backed by positive developments on the indicators. For instance, the RSI is printing bullish above 50.00 and the 5-day and 10-day EMAs are trending north in favor of the bulls. The rising MACD is indicating more gains could be in the offing. For AUD/USD, the path of least resistance is on the higher side. The immediate resistance of 0.7266 (100-day EMA) could be put to test in the short-term. A break higher would expose the next resistance lined up at 0.7318 (July 20 low). A break below the ascending 10-day EMA would neutralize the immediate bullish outlook.

Key notes

  • AUD/USD analysis: RBA meeting up next, credit conditions and labor market taking center stage
  • AUD/USD: Australian dollar attempts to breakout at 0.72105; RBA interest rate decision
  • AUD/USD Forecast: Has eroded 9-month-long falling trendline ahead of the RBA rate decision

About the RBA Rate Statement

Decisions regarding this interest rate are made by the Reserve Bank Board and are explained in a media release which announces the decision at 2.30 pm after each Board meeting.

About the RBA Rate Decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.

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Stock Market News

Alibaba Says it Will Help China Buy $200 Billion in Goods in the Next Five Years


E-commerce giant Alibaba announced Tuesday it plans to help global businesses sell $200 billion in goods to China in the next five years.

A day earlier, Chinese President Xi Jinping said his country will import $30 trillion in goods and $10 trillion in services over the next 15 years. China’s trade deficit with the U.S. — which hit a record high in September — has been targeted by the Trump administration with tariffs this year.

“We hope through globalization to use China’s consumer market to bring the whole world’s goods to China,” Alibaba CEO Daniel Zhang said during a speech at the “Global Import Leadership Summit,” hosted by the Chinese e-commerce giant and the China Council for the Promotion of International Trade.

“Especially some small and medium sized enterprises, they need to open their market in China,” Zhang said, according to a CNBC translation. The event took place on the sidelines of the China International Import Expo, which is part of a major Chinese effort to present the country as an anti-protectionist consumer of the world’s goods., Alibaba’s domestic e-commerce rival, announced Monday it will purchase nearly 100 billion yuan ($14.4 billion) in overseas brands’ goods. No timeframe was given.

Zhang’s comments echoed outgoing Alibaba Chairman Jack Ma’s push to work with small business on the company’s e-commerce platforms.

Ma said in September that Alibaba can no longer fulfill his promise of creating 1 million U.S. jobs due to trade tensions.

At a separate event on Monday alongside the expo, Ma called the U.S.-China trade war the “most stupid thing in this world,” according to Reuters and state media reports.

Zhang is set to succeed Ma as chairman of the board next September. Until that time, Ma will remain executive chairman. He plans to stay on the board of directors through the 2020 annual shareholders meeting while focusing more of his time on philanthropy and education.

Last week, Alibaba lowered its fiscal 2019 revenue guidance by 4 to 6 percent.

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Two Years In, Trump Holds Stock Market Bragging Rights

From: via

U.S. President Donald Trump has taken credit for the stock market’s gains during his nearly two years in the White House, and those claims are reasonable given the impact of tax cuts and pro-business policies on investor sentiment.

The S&P 500 has risen 28 percent since Trump’s election in November 2016 to the eve of congressional midterm elections on Tuesday. This surpasses the market’s performance over the same time frame under any other president in the past 64 years. Under President Dwight Eisenhower, the S&P 500 rose 29 percent from his election in November 1952 through November 1954.

Sweeping corporate tax cuts, an initiative driven by Trump, supercharged U.S. companies’ earnings and helped lift the cash-rich technology sector. The Republican party last year passed the biggest overhaul of the U.S. tax code in over 30 years, boosting U.S. corporate earnings.

Still, other sectors that could have been expected to benefit strongly from a Trump presidency have lagged. Indeed, the individual stocks that have gained and lost the most during his reign have little discernable link to Trump’s presidency.

How the market shakes out in the final two years of Trump’s presidency will probably be influenced by Tuesday’s elections. Analysts expect pressure on stocks if Democrats gain control of the House of Representatives and a sharper downward reaction if they sweep the House and Senate.

On the contrary, if Republicans hold their ground, stocks could gain further, with hopes of more tax reform ahead.

rump’s strong stock market record has been maintained even after a recent pullback on Wall Street as worries about trade battles, inflation and rising interest rates have increased caution among investors. Starting in 2010 under President Barack Obama as the world recovered from the financial crisis, the S&P 500 has enjoyed its longest bull market in history.

With more than half of Trump’s presidency still to come, how the market will perform over his whole term is unknown. Democratic President Bill Clinton saw the S&P 500 triple during his two terms in the White House.

Average S&P 500 company earnings per share are on track to rise 24 percent this year, the strongest annual gain in eight years, according to IBES data from Refinitiv.

Investor confidence stemming from the tax cuts and Trump’s other business-friendly policies so far have more than made up for ongoing worries on Wall Street that his trade conflict with China is hurting the U.S. economy, and that it could become worse.

The tax cuts also led Apple (NASDAQ:AAPL) and other multinationals in the technology sector to repatriate billions of dollars in profits held overseas, some of which went toward buying back stock and sending Wall Street higher.

The S&P 500 information technology index has gained 51 percent since Trump’s election. Financials, which benefited from Trump’s deregulation of the banking industry, have climbed 34 percent since Nov 8, 2016.

Still, some companies that had been expected to boom under Trump have fared poorly. The S&P 500 energy index is flat since Trump’s election, even though crude prices rose over 50 percent during that time and despite Trump putting the brakes on Obama-era policies aimed at reducing the country’s reliance on oil.

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Cryptocurrency News

Fake Elon Musk Accounts on Twitter Promote Bitcoin Scams, One Collects $170K


Several verified Twitter accounts have been hacked to impersonate Elon Musk today, Nov. 5, with one reportedly collecting almost $170,000.

After compromising verified accounts, scammers changed the profile name and picture in order to pose as the Tesla CEO. Scammers would then post in comment threads started by the real Elon Musk, so as to give the impression of legitimacy. Some of the scam tweets said that Elon Musk was conducting “the biggest” crypto-giveaway in the world for those who use “Bitcoic” (read Bitcoin), and provided a link to “participate” in the giveaway.

To skirt Twitter security measures, scammers subtly changed one of the characters in the name, while still maintaining a display name that appeared to be “Elon Musk” at a glance, preculding Twitter from automatically flagging the account.

Hackers reportedly compromised several different accounts, including those of film production firm Pathe U.K. and U.S. politician Frank Pallone Jr.

Daily Beast reporter Lachlan Markay reported that sources on Pallone’s campaign confirmed the account was hacked, albeit without any political goals saying, “Just looks like a Bitcoin Scam.”

He subsequently added that one of the BTC wallets used in the scams received $158,256 and that the payments “are still coming.” At press time, the address referred to by Markay had a final balance of 26.38 BTC ($168,930).

Pathe U.K. later confirmed that it had recovered control of its account and deleted the fake Elon Musk tweets.

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